Finessing the Domain Flip

Domain names are big business – they represent our businesses, they relate to the topics and memes we are interested in and passionate about and, with a little knowledge, they serve as an exciting investment opportunity.

In VeriSign’s most recent Domain Name Industry Brief, the
registry reported that the global base of Internet domain
names grew by more than 3 million in the second quarter
of 2010, ending the second quarter with more than 196.3
million domain name registrations across all top-level domains
(TLDs).

As it becomes more difficult to find available domains,
consumers will ultimately turn to the “aftermarket” to find
domain names they can use. As such, Web professionals
are poised to generate immense profits from the retooling,
or flipping, of websites for profit. If you are skilled at Web
design, content development, link building or affiliate
marketing, you are far ahead of the game.

But in order to successfully flip a domain you must
find one with the potential to turn a few dollars into hundreds
or thousands of dollars; separating those with potential
from those without.

Locating Low-Value Domains
for a High-Value Flip

Finding domain names for sale is the easy part of the flip.
Sites such as BoxCar.com, Devsa.com, Sedo.com, Flippa.com,
SnapNames.com, Afternic.com, NamePros.com, BuyDomains.
com and GoDaddy Auctions all provide viable opportunities
to acquire domains.

Know well before you sign up for these services, however,
that you will often encounter domain owners selling
their assets for what a reasonable person might consider outlandish
prices. In the end, domains are worth what someone
is willing to pay for them. Knowing the key qualities that
buyers look for in a domain will set you on a course to profit
from the flip, and not get burned in the process.

Key Qualities of Domains and
How They Affect Price

All domain names (and websites) are not created equal.
Outside of being short and memorable, there are several
well defined qualities of domain names that present the
best possible opportunity when turning an investment
into a profit.

■ Keywords in the Domain: It has been proven over the
years that using keywords within a domain provides a
tremendous advantage for ranking highly for those
terms. Both non-hyphenated and hyphenated domains
can gain this advantage. More often than not, an exact
match keyword domain can claim the top position on
Google with very little effort. This is one of the best
reasons for owning a generic keyword domain, and
what makes them so valuable.

■ Natural Search/Social/Advertising Traffic: The domain
names that sell for the most amount of money (outside
of single-word domains like Sex.com, which recently
sold for $13 million) have one thing in common — visitors
and pageviews. While there are different stages of development
for the domains you will find for sale, having
some traffic — from natural search, social networks or
even advertising — will provide a measure of the site’s
potential. The optimal domain to buy is one that receives
a modest level of natural search traffic. Selecting domain
names with traffic from social networks or advertising
requires an investment either in time or money; not necessarily
ideal if you need to ensure visitors keep arriving
or if managing dozens of domains.

■ Website Earnings/Potential: The domain name aftermarket
is flooded with those of low quality and questionable
potential. Domains that typically sell on the
aftermarket are those with a track record of monetary
performance or the ability to develop revenue streams.
When a domain name has demonstrated its ability to
profit from the traffic received it will ultimately raise
the price. The challenge of buying websites with existing
revenue, however, is the due diligence that is required.
Is there some legacy effect, such as users’
bookmarks who might not respond to new ownership
or content? Are existing revenues a result of well-managed
PPC campaigns? It is imperative to understand
any and all sources of revenues, as well as the cost or
upkeep required to maintain them.

These are just a few of the qualities you should look
for when purchasing a domain name to flip for a profit.
But what domains are right for whom?

Domain Flipping for Design, SEO
and PPC Experts

You might be a Web design maven but not be skilled at
driving traffic through social media. Or, you might be the
PPC guru of your company but couldn’t design a square.
The solution is to select domain names aligned with your
skill set.

■ Domains for Designers: There are thousands of domain
names in the aftermarket begging for a professional
Web design to be applied. If you possess skills
in template design for WordPress, Joomla or Drupal,
you might be surprised how much of an increase in
value you can get by applying a more aggressive and
compelling layout to existing content. Consider purchasing
a few $1 domains on eBay, applying your design
expertise then listing them for sale for a quick,
inexpensive flip.

■ Domains for Content Developers: If skilled with
copywriting and content development then the world
of domaining is your digital oyster. Because low-quality
content abounds on the Internet, if you are able to
develop creative content on a variety of topics related to
a domain name, your domains will be in high demand.
Consider acquiring a few quality, modestly priced domain
names and start writing. Choose content themes
wisely by identifying keywords and phrases with the
highest commercial intent, and the sites you develop
will be positioned for substantial profits.

■ Domains for SEO Masters: Those who specialize in
search engine optimization stand to generate the greatest
profit from flipping domains. Being able to take a
website (or domain) with little or no traffic and securing
placement for even long-tail keywords can make almost
any domain profitable. SEOs skilled at link
building in particular are well suited to flipping domain
names as the number of inbound links is a common
variable in website valuation.

■ Domains for Affiliates: Affiliates have an inherent
edge when it comes to flipping domains. Identifying
the best, most relevant offers for a website’s incoming
traffic can turn a “no profit” website into a “high profit”
one. Domains can then be sold at upwards of 10 times
monthly earnings.

Flipping domains is not for the cautious as a great deal
of risk is involved. Applying appealing visual themes,
writing compelling content, building links and establishing
revenue streams is no guarantee that domains will
ever sell, even if purchased at a premium. For this reason,
it is not uncommon to see domains listed for thousands
of dollars, as desperate domainers make an effort to recoup
at least some of the funds they have sunk into the
domain. However, by using the formal skills you have acquired
as a Web professional, domain flipping is a legitimate
possibility for added income.